The fundamental reason is that productivity in manufacturing has been rising
rapidly and demand for manufactured products has been growing more slowly. To
supply the stuff that people want requires fewer jobs.

And then, manufacturing is becoming feasible in more parts of the world. There
is more competition, including from countries with much lower wages. As they
emulate American production, they take market share.

What’s the best manufacturing strategy for the U.S. in that situation?

It’s certainly not playing defense and trying to save jobs. The U.S. has very,
very high wages compared to other countries. Yet it also has a comparative
advantage, which is deep knowledge, high R&D intensity, and the best science and
technology base in the world.

The step that makes the most sense for the U.S. is to become the producer of the
machinery that will power the next global manufacturing revolution. That is
where the most complex and sophisticated products are, and that is the work that
can pay higher wages.

What kind of revolution are you talking about?

My guess is that developments around information technology, 3-D printing, and
networks will allow for a redesign of manufacturing. The world will be massively
investing in it. The U.S. is well positioned to be the source of those machines.
It can only be rivaled by Germany and Japan. ...

The U.S. ... should look to ... pharmaceuticals, chemicals, and machinery. It’s
very hard to get into those. Very few countries are in that game. ...

If you look broadly at the U.S...., the country is super-competitive at
agriculture and the industries that support it, like farm machinery,
agrochemicals, and genetically modified seeds. It is strong in aerospace with
Boeing, GE, Northrop Grumman, and Pratt & Whitney. It is a leader in
pharmaceuticals and medical equipment, and it is the clear leader in information
technology and the Internet. New industries often arise from the combination of
capabilities...

How well is the U.S. doing in staying competitive?

For a while now, the U.S. has been much less focused on being competitive than
most other places are. Americans have the feeling they are born to win, and if
they don’t, someone else is cheating. The U.S. has many self-inflicted wounds.
It has an infrastructure that’s increasingly lousy and a corporate tax rate
higher than most countries’. But the most important [problem] is immigration
policy. It’s been a real disaster by preventing the attraction and retention of
the high-skilled people who come here to study and then don’t stay.

The fundamental reason is that productivity in manufacturing has been rising
rapidly and demand for manufactured products has been growing more slowly. To
supply the stuff that people want requires fewer jobs.

And then, manufacturing is becoming feasible in more parts of the world. There
is more competition, including from countries with much lower wages. As they
emulate American production, they take market share.

What’s the best manufacturing strategy for the U.S. in that situation?

It’s certainly not playing defense and trying to save jobs. The U.S. has very,
very high wages compared to other countries. Yet it also has a comparative
advantage, which is deep knowledge, high R&D intensity, and the best science and
technology base in the world.

The step that makes the most sense for the U.S. is to become the producer of the
machinery that will power the next global manufacturing revolution. That is
where the most complex and sophisticated products are, and that is the work that
can pay higher wages.

What kind of revolution are you talking about?

My guess is that developments around information technology, 3-D printing, and
networks will allow for a redesign of manufacturing. The world will be massively
investing in it. The U.S. is well positioned to be the source of those machines.
It can only be rivaled by Germany and Japan. ...

The U.S. ... should look to ... pharmaceuticals, chemicals, and machinery. It’s
very hard to get into those. Very few countries are in that game. ...

If you look broadly at the U.S...., the country is super-competitive at
agriculture and the industries that support it, like farm machinery,
agrochemicals, and genetically modified seeds. It is strong in aerospace with
Boeing, GE, Northrop Grumman, and Pratt & Whitney. It is a leader in
pharmaceuticals and medical equipment, and it is the clear leader in information
technology and the Internet. New industries often arise from the combination of
capabilities...

How well is the U.S. doing in staying competitive?

For a while now, the U.S. has been much less focused on being competitive than
most other places are. Americans have the feeling they are born to win, and if
they don’t, someone else is cheating. The U.S. has many self-inflicted wounds.
It has an infrastructure that’s increasingly lousy and a corporate tax rate
higher than most countries’. But the most important [problem] is immigration
policy. It’s been a real disaster by preventing the attraction and retention of
the high-skilled people who come here to study and then don’t stay.